Computer generated and non-appraiser valuations
If you're considering using one of the many "free home valuation" tools to figure out your property's value or contemplating trying an automated valuation model (AVM) instead of an appraiser to maybe save some money, you're taking a huge risk. We want you to know why your best option with a large investment like real estate is to us. Frank F. Butler, SRA 910-596-8435.
- It takes an expert to properly value homes with unique features. So a computer returns an estimated value of say $150,000. Did it account for whether the majority of homes in the area are much higher or much lower? That it is on a golf course or not? The neighborhood is in decline or on the rise? The desirability of its tree-lined street versus the next street over? Did it account for any price concessions the seller may have paid for the buyer at settlement such as closing costs?
- Assessed values are often inaccurate or out of date . Many AVMs and free online services rely on public assessment records. In North Carolina it is required that revaluation occur either every four years or eight years, but typically every eight years. The assessed value may be nearly eight years old in that case. Furthermore, assessors do not inspect the interior of a home; thus, they really don't know what the interior design or features the home has. When you use an AVM or free online service, you risk a lower value than reality.
- Ensure comparable sales are truly like your property. A computer might compare your subject property to another property with similar square footage sold three months ago a quarter of a mile away; however, that "comparable" property may front a four-lane street, a 55 M.P.H. speed zone, may be next to a commercial zone or could be in a flood-zone. Also, the "comparable" sale could have been sold under duress, such as in a divorce situation, or not at arm's length, such as to a family member. A computer simply does not know all the adjustments that might need to be made to a "comparable" property's sales price.
- Appraisers are the first to know when values are going up or down in a market. Automated valuations use data from recent, nearby sales. If those sales were completed at the peak of a local housing market, the computer will think the trend is going up. Even if a professional appraiser knows that the overall neighborhood is beginning to experience a downturn. If you are a lender, don't get stuck with a property that's been overvalued by a computer.
- With an appraiser, there is no conflict of interest. Free online home values are often farmed out to real estate agents in your area, who use the service to get your listing when you decide to sell. The best way to do that is to impress you with their confidence that they can get a higher price for your property. If they tell you your property is "worth" the high end of what they believe they can sell it for, the theory goes, you're more likely to sign a listing agreement. With most things, it's best to "under promise and over deliver" — but the opposite is true when you use a free online home value service.
- Know for sure that the house is really there! A computer can't so much as drive by a house to see if it's actually located where it's supposed to be, has four walls and a roof, and really is a four bedroom split level and not a one bedroom shack.
- Be assured the person determining your property's value has the right credentials, education and experience . As a Certified General Real Estate Appraiser, you can be confident I am qualified, ethical and prepared to complete your assignment professionally - and with good judgment. Can the qualifications of a free online estimate really compare to an appraiser's? And if you're relying on an automated valuation, you're cheating yourself out of an appraiser's education, experience and expertise.
If you have any questions regarding appraising or want a fee quote, don't hesitate to contact us today.